Prediction: $1 Trillion U.S. Carbon Market By 2020

February 16, 2008

Email this story Print this post Add your comments

The U.S. will be home to a $1 trillion carbon emission market by 2020 if federal and state policymakers continue on their current path towards a cap-and-trade program that is confined to domestic trading only, according to an analysis of bills before the U.S. Congress by New Carbon Finance research economists.The researchers predict that in 12 years a carbon-constrained U.S. economy that includes a cap-and-trade system allowing only domestic trades will produce:

A $1 trillion carbon trading market – more than twice the size of the European Union’s Emissions Trading Scheme;
A carbon price of $40 per tonne as soon as 2015, which will result in a rise in consumer energy prices in real terms of roughly 20 percent for electricity, 12 percent for gasoline and 10 percent for natural gas – as well as impacts on other prices as higher energy and transportation costs filter through the economy; and
Major U.S. investments in renewable energy, energy efficiency, and greenhouse gas mitigation projects and technologies.

New Carbon Finance predicts a U.S. carbon price of $35-40 per tonne as soon as 2015 if the Lieberman-Warner bill, with its blanket veto on international project credits, succeeds into law…

“We believe that, to smooth the transition to a carbon-constrained economy, any climate change bill should provide for international project credits, currently available at $10 to $20 per tonne,” Says Milo Sjardin, who heads the North American division of New Carbon Finance. “This component can then be reduced over time to achieve greater emissions reductions within the U.S.”

Allowing carbon-constrained U.S. firms to trade credits with firms in China or India, for example, where emission reduction measures are relatively inexpensive, would yield an estimated U.S. carbon price as low as $15 per tonne, thereby saving the American economy about $145 billion per year, says Guy Turner, London-based Director of New Carbon Finance.

The impact on U.S. consumer level energy prices of a carbon price of $15 vs. $40 a tonne is estimated by New Carbon Finance as follows:

At $15 a tonne:

Electricity would increase seven percent in real terms from today’s average U.S. retail price (marginally higher than increases seen over the past four years);
Gasoline would increase four percent (approximately 13 cents a gallon in today’s terms, small relative to increases caused by higher oil prices); and
The impact on the price of natural gas would be five percent.

At $40 a tonne:

Electricity would increase 20 percent in real terms from today’s average U.S. retail price;
Gasoline would increase 12 percent (35 cents a gallon); and
The price of natural gas would increase about 10 percent.

Email this story Print this post Add your comments

Advertisers

Enhance Sustainability. Improve Profitability.

Learn how at the SAP Sustainability Resource Center. >>

Unclear about the EPA's new GHG Rule?

Learn how it could affect your business. >>

EPA mandatory emissions reporting starts Jan 1st

CSA Standards can help your organization get ready for compliance. Find out how. >>

Best Practices: Product Environmental Compliance

How to achieve compliance at a significantly lower cost. Download the full report. >>

Join the Discussion

Recent Daily News [ see all ]

11/20/2009
11/19/2009
11/18/2009

Charts [ see all ]

European Paper Industry Cuts CO2 Emissions by 42% since 1990

S. America Takes Most Urgent View of Copenhagen Talks

Nike Tops Annual Climate Action Scores

Oceans May Trap more Carbon than Forests

Jobs

View All Jobs >> Post a Job >>

Comments and Discussions

Environmental Leader on S. America Takes Most Urgent View of Copenhagen Talks
"The survey respondents (the PDF report mentions 4,000 respondents in 38..."

Jake on UPS Trying New Hydraulic Hybrid Trucks
"A point of clarification: the Reuters press release referenced herein reports that 20 UPS will purchase..."

Custom Organic Shirts on S. America Takes Most Urgent View of Copenhagen Talks
"90% of North Americans believe it is urgent to get a global climate..."

peter dublin on California City’s Green Building Ordinance Applies to Commercial Buildings
"Why energy efficiebnt regulation on buildings –..."

JEONG CHUN PHUOC on EU Poised to Give Heavy Industry Free Carbon Permits
"“Competitive Intelligence in Environmenting : A Holistic Deal for..."

Philip Vandenberg on Building an Energy-Efficient Data Center Using Virtualization Technology
"Rob has implemented many best practices for data centres..."

George Hoguet on Rising Sea Levels Would Hit U.S. East Coast Hardest
"Want to add some pressure into the system? Check out the Facebook group -NO TV..."

Environmental Leader